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‘No crystal ball’: Sussex takes cautious approach with budget

GEORGETOWN — Assumption in an uncertain COVID-19 world coupled with a more conservative approach stand as foundational pillars in development of Sussex County’s fiscal year 2021 budget, a spending plan that will deviate somewhat from those in recent years past.

“I have no crystal ball,” said Sussex County Director of Finance Gina Jennings. “We are assuming that revenues will decrease because unemployment is up, and people’s retirement savings have been impacted. These two factors alone will affect the sale of real estate is Sussex County.”

Gina Jennings

“I am taking a very cautious approach and will be presenting a flat budget with no large initiatives and no new grants or capital projects until we know how our revenues will be impacted,” said Ms. Jennings.

As departmental heads were formulating budget requests, the coronavirus crisis arrived. In response, departments were tasked to prioritize expenses and develop baseline budgets.

“We developed a flatline budget,” said Ms. Jennings. “There will be supplemental expenses depending on our revenue, because right now it’s hard to tell how our revenue is going to be impacted.”

What’s known in projecting next year’s budget is that there are unknowns.

Will new housing and development drop off?

To what degree will the pandemic have on the real estate market, typically a revenue source for millions in realty transfer tax for county coffers?

Will the economy recover, and if so, will it be short-term or long-term?

“As far as data, I have already seen a slight decrease in the number of building permits applied for daily over last year’s activity; I am unable to see a decrease in Realty Transfer Tax (RTT) at this time,” said Ms. Jennings. “I anticipate that any decrease in RTT will be recognized this summer. Therefore, I have to project building related revenues lower than last year fiscal year until I have more data to support anything higher.”

“Currently, I have building related revenues (other than Realty Transfer Tax) between 75 to 80 percent of projections and Realty Transfer Tax at 65 percent of FY2020 projections,” said Ms. Jennings, who presented a brief overview of FY21 budget projections during the May 12 Sussex County Council teleconference session.

She will provide council with a more in-depth, detailed presentation May 19.

“Overall, when you see the budget next week there will be an overall revenue increase of $1.3 million. That is a 2 percent increase. But as you’ll see that $1.3 million, one million of it is just the accommodations tax just showing that we are able to collect it, if council chooses to,” said Ms. Jennings.

The current FY20 budget totaled $186 million.

The public hearing on the FY21 budget proposal is June 23.

Ms. Jennings said county revenues could be impacted in a couple of ways. One is economically. Another is through the grants the county receives from the state and federal levels.

“At this time, I am assuming the state of Delaware and federal governments will continue to provide the grants given in the past,” said Ms. Jennings.

Additionally, Ms. Jennings is recommending the FY21 budget deviate from recent years when slices of savings were used to bolster capital and pension funds.

“Last year we moved additional money into capital and our pension funds. We are not planning on doing that this year. These things are what you do in the good years,” said Ms. Jennings. “Not projecting 2021 to be a good year, so we are going to be able to live off what we have done in the past as we are moving forward with 2021. We’re using some savings … the only savings we are using is commitments that county council has made in previous years that we want to honor those commitments going forward.”

There are no new initiatives recommended.

“We’re keeping a baseline budget until we know where the revenues are going to fall,” Ms. Jennings said. “I used the departments’ suggestions to develop a financially conservative budget that will have revenue benchmarks which will allow funds to be spent once we have a clearer picture on how COVID-19 will impact us.”

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